Tuesday, October 27, 2015

In Garrido v. Air Liquide Industrial U.S. LP (10/26/15) --- Cal.App.4th ---, the plaintiff worked as a truck driver for the defendant, delivering industrial gases in California and neighboring states. He filed a putative class action alleging wage and hour violations against the defendant. The defendant moved to compel individual arbitration pursuant to arbitration agreement, which stated that it was governed by the Federal Arbitration Act (FAA).

The trial court denied the motion to compel arbitration. Analyzing the case under Gentry v. Superior Court (2007) 42 Cal.4th 443, the court held that the defendant could not enforce the agreement because doing so would prevent the plaintiff from bringing a class claim and would stand as an obstacle to his right to vindicate statutory labor rights. The defendant appealed, and the Court of Appeal affirmed, holding as follows:

Although the agreement stated that it would be governed by the FAA, the FAA did not apply here. The FAA does not apply to “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce," which includes "transportation workers." As a truck driver transporting goods across state lines, the plaintiff was a "transportation worker," and the FAA did not apply.

Without the FAA, the California Arbitration Act (CAA) applied.

Although the California Supreme Court held in Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, that Gentry’s rule against employment class waivers was preempted by the FAA, Gentry still controls cases where the FAA does not apply. "While Iskanian made clear that the Gentry rule is preempted by the FAA, it did not go beyond that finding. Therefore, the Gentry rule remains valid under the CAA."

Substantial evidence supported the trial court's finding that the four Gentry factors were met: the potential recovery for any individual was modest; there existed a potential for retaliation against the employees; the plaintiff testified that he did not know of his rights during his employment, and the court could infer that the same was true of the other employees; and requiring each employee to bring a separate action would create "real world obstacles to the vindication of class members’ rights..."

"In light of these determinations, the trial court correctly found that a class proceeding here would be a significantly more effective way of allowing employees to vindicate their statutory rights," and the defendant could not enforce the arbitration agreement.

In Cardenas v. M. Fanaian, D.D.S., Inc. (10/1/15) --- Cal.App.4th ---, the plaintiff complained to police that her wedding ring had been stolen at work, and the defendant terminated her because the police investigation was disrupting the workplace. Cardenas sued for violation of Labor Code section 1102.5 and wrongful termination in violation of public policy. A jury found in her favor, the trial court entered judgment, and the defendant appealed. The Court of Appeal affirmed, holding as follows:

An action under section 1102.5 is a stand-alone, statutory action that exists independently of, and does not depend upon, an action for wrongful termination in violation of public policy. "To establish a prima facie case of retaliation under section 1102.5(b), a plaintiff 'must show (1) she engaged in a protected activity, (2) her employer subjected her to an adverse employment action, and (3) there is a causal link between the two.'" As in other retaliation actions, if the employer demonstrates a legitimate business reason for its action, the employee then bears the burden of demonstrating that the employer's reason is pretextual.

Section 1102.5 does not require the employee to show that the alleged illegal activity violates a policy that "inures to the benefit of the public at large rather than to a particular employer or employee."

Section 1102.5 also does not require the employee to show that the alleged illegal activity involved "business enterprise wrongdoing."

(A) California Labor Code section 551 provides that ‘[e]very person employed in any occupation of labor is entitled to one day’s rest therefrom in seven.’ Is the required day of rest calculated by the workweek, or is it calculated on a rolling basis for any consecutive seven-day period?

(B) California Labor Code section 556 exempts employers from providing such a day of rest ‘when the total hours of employment do not exceed 30 hours in any week or six hours in any one day thereof.’ (Emphasis added.) Does that exemption apply when an employee works less than six hours in any one day of the applicable week, or does it apply only when an employee works less than six hours in each day of the week?

(C) California Labor Code section 552 provides that an employer may not ‘cause his employees to work more than six days in seven.’ What does it mean for an employer to ‘cause’ an employee to work more than six days in seven: force, coerce, pressure, schedule, encourage, reward, permit, or something else?

Mendoza is a putative class and PAGA action, so I've listed it under those categories on the blog.

The Supreme Court's web page for Mendoza is here. You can request automatic e-mail notifications from the Court here.

Tuesday, October 13, 2015

A quick word on In re Acknowledgment Cases (8/12/15, pub. 8/31/15) --- Cal.App.4th ---, in which the Court of Appeal held as follows:

Los Angeles Administrative Code section 4.1700 requires police officers hired by the LAPD to reimburse the city for certain training costs if they quit within five years of graduation and go to work for another law
enforcement agency within one year after quitting. The city requires LAPD recruits to sign an "acknowledgment," stating that they will reimburse the city as stated in section 4.1700.

Labor Code section 2802 requires an employer to reimburse an employee for "all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties." Where a statute or ordinance requires an employee to have a license, the employee must bear the cost of the license. However, where the law does not require the license, but the employer itself requires either training or licensure, the employer must bear such cost.

State law requires every peace officer to complete an introductory training course, known as POST training. Employers are not responsible for the cost of such training under section 2802.

The city requires additional training, beyond that required under state law. Under section 2802, the city must bear the cost of this training. "Accordingly, both
LAAC section 4.1700 and the acknowledgment are void to the extent that they require
reimbursement for the cost of training other than basic POST certification training."

The appellants argued that the city must pay for all training costs because the city requires recruits to go through such training at the LAPD Academy. The Court did not reach this issue. The Court also did not decide "whether the city can
require recruits who are already POST certified, including lateral officers, to attend POST
training at its academy and to reimburse it for the cost of that portion of the training
pursuant to LAAC section 4.1700."

Monday, October 12, 2015

Industrial Welfare Commission Wage Orders 4 and 5 have special provisions for meal periods that apply only to employees in the health care industry, as defined. Unlike employees in other industries, under Wage Orders 4 and 5, employees in the health care industry who work more than eight hours in a workday may waive one of their two meal periods, even if they work more than twelve hours in the workday.

In Gerard v. Orange Coast Memorial Medical Center (2/10/15) 234 Cal.App.4th 285 (discussed here), the Court of Appeal held that this provision contradicts Labor Code section 512 and is invalid. The California Supreme Court granted review of Gerard, and it is pending on the Court's docket.

In the mean time, Governor Brown on October 5 signed SB 327, which amends Labor Code 516 to provide:

Notwithstanding subdivision (a), or any other law, including Section 512, the health care employee meal period waiver provisions in Section 11(D) of Industrial Welfare Commission Wage Orders 4 and 5 were valid and enforceable on and after October 1, 2000, and continue to be valid and enforceable. This subdivision is declarative of, and clarifies, existing law.

Thursday, October 8, 2015

On October 6, Governor Brown signed legislation amending the State's Fair Pay Act. Cal. Labor Code section 1197.5. Broadly speaking, the Fair Pay Act prohibits employers from paying their employees less than employees of the other sex for equal work in the same establishment and under similar working conditions, "except where the payment is made pursuant to a seniority system, a merit system, a system which measures earnings by quantity or quality of production, or a differential based on any bona fide factor other than sex."

The amended law changes some of these terms and provides protections for employees who complain of violations. It provides:

(a) An employer shall not pay any of its employees at wage rates less than the rates paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions, except where the employer demonstrates:

(1) The wage differential is based upon one or more of the following factors:

(A) A seniority system.

(B) A merit system.

(C) A system that measures earnings by quantity or quality of production.

(D) A bona fide factor other than sex, such as education, training, or experience. This factor shall apply only if the employer demonstrates that the factor is not based on or derived from a sex-based differential in compensation, is job related with respect to the position in question, and is consistent with a business necessity. For purposes of this subparagraph, “business necessity” means an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve. This defense shall not apply if the employee demonstrates that an alternative business practice exists that would serve the same business purpose without producing the wage differential.

(2) Each factor relied upon is applied reasonably.

(3) The one or more factors relied upon account for the entire wage differential.

The new law makes the following changes as well:

Employers must keep records of wages and other terms and conditions of employment for three years, rather than two;

Employers may not: (1) discriminate or retaliate against employees who take action to enforce the law; (2) prohibit employees from discussing their wages or the wages of others, or aiding or encouraging other employees from enforcing their rights under the law;

Employees discriminated or retaliated against may sue for reinstatement, lost wages and benefits, and equitable relief;

A civil action has a statute of limitations of "one year after the cause of action occurs."

Additional information, including the text of the bill and a red-lined version of section 1197.5, is available here.

Tuesday, October 6, 2015

On October 2, 2015, Governor Brown signed Assembly Bill 1506, which amends the Labor Code Private Attorneys General Act of 2004 (PAGA) to provide employers the opportunity to cure certain check stub violations before being sued. AB 1506 is urgency legislation that goes into effect immediately. Here's how it works:

Labor Code section 226 requires employers to provide certain information to their employees on their wage statements, including the inclusive dates of the pay period (section 226(a)(6)) and the name and address of the employer (section 226(a)(8)). PAGA allows employees to seek civil penalties for violations of section 226.

Under the existing Labor Code section 2699.3(c), employers may cure certain violations within the time frames provided. If the employer cures, the plaintiff may not sue under PAGA.

The new law adds Labor Code sections 226(a)(6) and (8) to the list of statutes that the employer may cure. For the wonks out there, it actually accomplishes this by deleting sections (6) and (8) from the list of statutes for which there is no opportunity to cure.

Amended section 2699(d) provides:

A violation of paragraph (6) or (8) of subdivision (a) of Section 226 shall only be considered cured upon a showing that the employer has provided a fully compliant, itemized wage statement to each aggrieved employee for each pay period for the three-year period prior to the date of the written notice sent pursuant to paragraph (1) of subdivision (c) of Section 2699.3.

Amended section 2699.3(c)(2)(B)(ii): provides:

No employer may avail himself or herself of the notice and cure provisions of this subdivision with respect to alleged violations of paragraph (6) or (8) of subdivision (a) of Section 226 more than once in a 12-month period for the same violation or violations contained in the notice, regardless of the location of the worksite.

Saturday, October 3, 2015

A quick word on Navarro v. Encino Motorcars, ___ F.3d ___ (9th Cir. 3/24/15), which I missed earlier in the year. The plaintiffs worked as service advisors at a car dealership. Their job was to greet customers, evaluate service needs, suggest required services, and suggest additional services above and beyond those required to resolve the customers' complaints. They filed suit for payment of overtime wages under the Fair Labor Standards Act (FLSA). The district court dismissed their overtime claim, holding that they fell within the FLSA's exemption for "any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles." The Ninth Circuit reversed, holding as follows:

The FLSA requires covered employers to pay their employees minimum wage and overtime compensation. The FLSA exempts "any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles" from the overtime requirement. Federal regulations define these terms, and the parties agreed that the plaintiffs were not "salesmen, partsmen, or mechanics" as defined within the regulations. The question then was whether the Court should defer to the regulations.

First, the FLSA does not define the terms "salesman, partsman, or mechanic" and it is ambiguous as to their meaning. This is particularly so given that the exemptions are to be applied only to those "plainly and unmistakably within their terms and spirit."

Second, because the regulation was duly promulgated after a notice-and-comment period and has not changed since its promulgation in 1970, the Court reviewed the regulation under the "reasonableness" standard set forth in Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842 (1984).

Third, the regulation represents a reasonable interpretation of the statute and is consistent with the presumption that the exemptions should be construed narrowly. The Court noted that "there are good arguments" supporting the defendant's reading of the exemption, "But where there are two reasonable ways to read the statutory text, and the agency has chosen one interpretation, we must defer to that choice."

Friday, October 2, 2015

Over the last month, we have seen two cases dealing with anti-SLAPP motions in the employment law context. In Park v. Board of Trustees (8/27/15) --- Cal.App.4th --- (discussed here), a discrimination action, the Court held that a University's decision to deny tenure arose from protected communicative activity. The Court then remanded to the trial court for a determination of the plaintiff's likelihood of success on the merits. In Barker v. Fox & Associates (9/10/15) --- Cal.App.4th --- (discussed here), a defamation action, the court reversed an order denying the defendant's anti-SLAPP motion, finding that the plaintiff had waived his argument that the alleged statements were not privileged, and that the plaintiff had failed to show a reasonable probability of success on the merits.

Decambre v. Rady Children's Hospital (3/11/15, mod. 4/2/15) --- Cal.App.4th ---, is a third such case, which I missed when it came down earlier this year. The plaintiff was a doctor who sued several defendants, including the hospital where she worked, alleging discrimination, harassment, retaliation, wrongful termination, defamation, intentional infliction of emotional distress (IIED), and other causes of action. The trial court granted the defendants' anti-SLAPP motion to strike, finding that the defendants' decision not to renew the plaintiff's contract arose from the hospital's peer review process, which was protected as an official proceeding. The Court of Appeal affirmed in part and reversed in part, holding as follows:

Under the anti-SLAPP statute, Code of Civil Procedure section 425.16, and Kibler v. Northern Inyo County Local Hospital Dist. (2006) 39 Cal.4th 192, hospital peer review proceedings constitute protected "official proceeding[s] authorized by law," and the defendants' decision not to renew the plaintiff's contract was the result of that process. The Court rejected the plaintiff's contention that there was no peer review because the defendants did not report their non-renewal to the Medical Board of California. The behavior that led to the decision not to renew did not involve a "medical disciplinary cause or reason," and no such report was required.

The defendants failed to meet their burden to show that the plaintiff's harassment, IIED, and defamation claims arose from protected activity. "The 'principal thrust or gravamen' of the plaintiff's claim determines whether section 425.16 applies," and the court must examine the alleged wrongful conduct, rather than the alleged damages, to determine that issue. Here, the trial court erred in looking to the plaintiff's alleged damages, rather than the defendants' conduct. Some of the conduct underlying the harassment and IIED claims occurred before the peer review process even began, and none of that conduct "occurred within the context of, or in furtherance of, the peer review proceedings." Similarly, the conduct underlying her defamation claim arose after the non-renewal decision and was not part of the peer review proceedings.

In contrast, the defendants did show that the plaintiff's discrimination, failure to prevent discrimination, retaliation, and wrongful termination claims all arose from the peer review process. The wrongful termination claim cannot succeed absent a termination -- the Court did not distinguish between a termination and a non-renewal -- and the FEHA claims cannot succeed absent an adverse employment action. The only adverse employment action alleged here was the non-renewal decision. The defendants' motive, even if discriminatory, did not change the fact that the alleged conduct arose from protected activity.

The defendant having shown that the conduct at issue arose from protected activity, the burden shifted to the plaintiff to show probable success on the merits. The plaintiff failed show that defendants' asserted reasons for the non-renewal were pretextual. She did not refute the defendants' reasons for non-renewal. Instead, she asserted that she "could establish sufficient facts" to prove her claims, and this was not sufficient to meet her burden.

The plaintiff also asserted claims for violation of the Unfair Competition Law and the Cartwright Act, but I will not address those claims here. I also will not address the Court's holding on the trial court's order sustaining the defendants' demurrer to certain causes of action.

Just a quick word on this one. In Tellez v. Rich Voss Trucking (9/30/15) --- Cal.App.4th ---, the trial court denied the plaintiff's motion for class certification, but did not give any reasons for doing so. The Court of Appeal reversed and remanded, holding as follows:

While trial courts generally have broad discretion on motions for class certification,

“appellate review of orders denying class certification differs from ordinary appellate review. Under ordinary appellate review, we do not address the trial court’s reasoning and consider only whether the result was correct. [Citation.] But when denying class certification, the trial court must state its reasons, and we must review those reasons for correctness. [Citation.]” ***

“The right result is an inadequate substitute for an incorrect process. Thus the appellate scrutiny should be on the reasons expressed by the trial court in the context of counsel’s arguments, not merely whether the trial court reached a result [that] can be justified by implication.”

The Court remanded for the trial court to explain its reasons for denying the motion.

The district court shall decline jurisdiction over class actions when: more than two thirds of the class members are citizens of the State where the action was filed; at least one "significant" defendant is a citizen of that State; the principal injuries alleged were incurred in that State; and no similar class action has been filed against any of the defendants in the prior three years.

Plaintiff Bridewell-Sledge filed a putative class action against the defendants for failing to pay African American and female employees at a wage rate equal to white or male employees working in the same establishment and performing equal work. 14 minutes later, plaintiff Crowder filed a putative class action against the same defendants for failing to promote African-American and female employees because of their race and gender. The superior court consolidated the actions for all purposes.

Defendants removed the consolidated actions, and the district court again consolidated them for all purposes. After an OSC re. jurisdiction, district court retained jurisdiction over Bridewell-Sledge, finding that the local controversy exception applied, but remanded Crowder, finding that the local controversy exception did not apply because Bridewell-Sledge was a similar action and was filed in the three years prior to Crowder.

The Ninth Circuit reversed, holding that the district court should not have treated Bridewell-Sledge and Crowder as separate actions for CAFA purposes. By consolidating the two actions, the state court "destroy[ed] the identity of each suit and merge[d] them into one."

Under California law, when two actions are consolidated “for all purposes,” “the two actions are merged into a single proceeding under one case number and result in only one verdict or set of findings and one judgment.”

CAFA's legislative history supports this result. The purpose of the local controversy exception was “to ensure that state courts can continue to adjudicate truly local controversies in which some of the defendants are out-of-state corporations.” Remanding the consolidated cases to state court would accomplish this purpose.